The Staff Turnover - Essay Example

?INTRODUCTION The cost of staff turnover is the cost which the personnel of Human Resource Management estimate to be one fifty percent of the annual wage and benefits of the employees. But low staff turnover rate may actually be an indication of a greater and more costly problem and that is lack of employee engagement. No doubt that higher employee turnover rate is also costly for the firm. At Burger King the Management is trying to maintain the staff turnover rate while allowing new talent to come in the company (Can Employee Turnover Really Be Too Low? 2005). All organizations have people, that is, they have human resources. No matter what the size of an organization is or the amount of its resources, the organization survives and thrives because of abilities and capabilities of the people working there. The activities to maximize that ability and those capabilities are essential as to improve the performance of the workers. These activities are called human resource management and are the responsibility of all people in the organization (Heathfield, 2011). The organizational function, Human Resource Management (HRM) includes a range of activities that deals with issues related to employees such as; recruiting and training the best employees, dealing with performance issues, ensuring they are working efficiently and giving their best, deciding what staffing needs the company has and ensuring management practices conform to the regulations. The HRM function also includes organization development, employee motivation, communication, administration, wellness, safety, compensation and benefits. HRM is a comprehensive and strategic approach to managing the workplace environment and culture, and the people. Effective Human Resource Management enables the workforce to contribute productively and efficiently to the overall organization direction and towards the achievement of the organization's objectives and goals. HRM is the strategic utilization of the employees through which the company expect to add value to its products (Heathfield, 2011). STAFF TURNOVER Staff turnover is the rate at which an employer or an organization loses or gains employees. Simple way to describe staff turnover is how long employees tend to stay at the company. If an organization is said to have a high turnover comparative to its competitors, that means that workers of that organization have a shorter average tenure than those of other organizations in the same industry. High turnover may be damaging to a company's productivity if the skilled employees are frequently leaving and the worker population consists of a high portion of trainee workers. There a lot of factors that affect staff turnover, some are within the organizations control while others are completely beyond the control of the organization. One of the most common reasons given for leaving a particular company is the availability of higher paying job in some other firm. Some low wage employees are reported to leave a job for another that pays only fifty cents more per hour. The performance of the company is another element that plays part in staff turnover. If the firm is not performing well and is perceived to be in economic difficulty, this will also raise the spectre of imminent layoffs. Employees believe that it is sensible to look for other employment. The organizational culture; the capability of the company to obtain a sense of commitment on the part of workforce, the power of management, and the firm’s development of a sense of shared goals influences indices of job satisfaction as turnover rate and turnover intentions. Some jobs are inherently more attractive than others. A job's attractiveness is affected by many characteristics, challenge, repetitiveness, danger, capability to elicit a sense of achievement and perceived importance. The status of the job is also significant, so are many other factors. Another aspect that affect staff turnover is the general lack of knowledge and unrealistic expectations that job applicants may have about when they receive an offer. When these idealistic expectations are not fulfilled, the employee is disappointed and decides to quit (The cause of turnover, 2011). In addition to the issues discussed above, there are also factors particular to the person that can influence turnover rates. These contain both trait-based and personal factors. Personal factors comprise of things such as an aspiration to learn a new trade or skill, changes in family situation, or an unsolicited job offer. Other than these personal factors, there is also personality or trait-based features that are linked with turnover (The cause of turnover, 2011). When an employee is doing the work of more than one person but is still paid the same, he might want to leave that job. This regularly entails overtime and sometimes necessitating the employee to take the work home. Many workers say that they become overloaded and overwhelmed with the work. The increase in pressure and stress levels means that the employees cannot continue with their job and will sooner or later seek employment somewhere else. IMPACT OF STAFF TURNOVER TO BURGER KING As for all other organizations, staff turnover can be beneficial or costly for Burger King. Staff turnover is a very important issue of Human Resource Management. A certain amount of turnover is desirable and natural. The desirable staff turnover for Burger King would be when the good and hard working candidates are promoted to managerial and leadership positions, which have higher amount of responsibility. Another example is when inadequately performing workers leave, or are let go, preferably to be replaced by more productive employees. Therefore an acceptable amount of turnover brings in fresh talent and prevents stagnation. The incoming workers may be more skilled, better educated and have more enthusiasm and initiative than those who leave (Causes of -- and Solutions to --Undesirable Employee Turnover, 2007). On the other hand when the turnover negatively affects the company it is said to be undesirable. If the good talent leaves, the cost can be very high. It is important for the Human Resource Management at Burger King to understand the high cost of losing key employees. However, it is also essential for the company to recognize that general turnover rates of the labour force can also have a severe impact on Burger King’s profitability, and even survival. Burger King may incur a number of costs as a result of staff turnover. A few of the costs that may be sustained by Burger King are: 1. Recruitment of replacements, including advertising, administrative expenses, services associated with selection, such as processing of references, security checks, and psychological testing screening and interviewing. 2. Lost productivity related with the interim period before a substitution can be placed on the job. It is the time period when there is no employee working at the place of the one who left the company. 3. Administrative hiring costs. Hiring skilled labour is always expensive. Sometimes Burger King may have to pay the replacement more than they were paying to the previous employee. 4. Lost productivity because of the time needed by the new worker to get up to speed on the job. It takes time for the new employee to get acquainted to the organization’s culture and develop the skills required for the job. 5. Lost productivity linked with the time that co-workers may have to spend away from their own work to help the new employee. 6. Costs of training is to be also incurred, including co-worker time spent in formal training and supervisory, and also the time that the employee spend off the job while training. 7. Costs related to the period before the voluntary termination when employees tend to be less industrious. It is very common for the workers not work efficiently when they know that they are going to leave the job. 8. Sometimes costs linked with the communication of proprietary trade procedures, secrets, and skills to competitive organizations. If the employee resigning from the firm would be working in some competitive company he might use the former company’s ideas at his new job place. 9. Increased job loss insurance costs. 10. Public relations costs connected with having many involuntary or voluntary terminations in the neighbourhood spreading gossip about the company. This might hurt the image of the organization (The cause of turnover, 2011). WAYS TO MAINTAIN LOW STAFF TURNOVER RATE Maintaining a low staff turnover is extremely important for companies. One of the most basic ways for Burger King to achieve this is by providing the new employees with a positive work environment, where s/he wants to develop the rest of their career. This is because the highest level of turnover occurs between the first few days on the job. As a bad employer is one of the main reasons why most people quit during the first few weeks of their job, therefore, the employer can and should develop good relations with the newly recruited employees to give them a memorable first impression of the organization. The organization can also provide a flexible working environment to their employees. For instance, the employees can be given the flexibility of the working hours they chose to work in. In some cases, employees can also work from home if the job allows them to do so. Career development is another motivating factor for newly recruited employees. Whenever a worker joins an organization, one of his primary motives is to develop and build his career. Organizations that do not offer this, often suffer from high staff turnover rates because the employees feel themselves on edge in such an organization. Competitive wages is another important factor which pays an effective role in minimizing staff turnover rates. Any employee who is being paid less than employees working in other organizations for the same amount of work would naturally leave and join other organizations. Another factor that managers need to consider while hiring employees is not to hire just because the post is vacant and needs to be filled. This means that the employee should be passed properly. The appropriate information about the employee should be carefully collected and analyzed, including the references given by the employee. A number of skills testing techniques should also be applied to the employees to test the amount of skills they have (Employ Retention, n.d.). One more reason why employees leave any organization is because they feel they are not developing any new skills. The skills test would help identify the skills of the employees. The organization can then work towards developing more skills which can be a positive motivation towards the workforce. Holding regular review sessions is also helpful in increasing motivation levels. An employee would be positively driven to perform any task that s/he is involved in, rather than a task where s/he is only ordered to do. More involved employees tend to perform at a higher level and are more likely to achieve longer tenure. This would help develop an informed and positively motivated workforce, because the employees would fully understand the impact of their actions. Hence, they would feel a part of the organization and are likely to stay with the company for a longer period of time (Employ Retention, n.d.). Burger king has been previously retaining their employees by giving them educational incentives. A Burger King Franchise owner introduced an educational support program for the employees in an attempt to motivate employees and to achieve lower employee turnover. The owner paid costs of tuition and books. This helped to reduce the turnover rate at Burger King and it also indicated an increase in the employees’ productivity (Rinella and Kopecky, 1989). CONCLUSION Therefore, it can be aptly concluded that there a number of reasons for high staff turnover rates in any organization which should be taken under consideration by the Human Resource Management. Sure everyone can be replaced, but at what cost. In the case of Burger King, if the costs are too high and the survival of the company is at stake, then it is necessary for the company’s Management to take essential steps to maintain low staff turnover rate at the company (Kachmar, 2006). Burger King is trying to improve the reputation of fast-food industry by offering high quality training career prospects. The new features of the labour market such as a more concern towards the individual’s career life and more educatuon requires fast food companies to adapt their Human Resource strategies so that they can compete in new national and global contexts effectively. Hence, it may be useful for Burger King to recognize new features of retention to respond to the challenge (Walsh, 1998). Organizational culture can be another factor for the high turnover rate at Burger King. Some organizations provide a comfortable environment to work, which is why they attract more employees and have a low staff turnover. It is the job of the HR department to maintain a working environment where workers are at ease and able to work productively. References Can Employee Turnover Really Be Too Low, 2005, the rain maker group, retrieved on May 27, 2011, from http://www.therainmakergroupinc.com/add.asp?ID=127 Causes of -- and Solutions to --Undesirable Employee Turnover, 2007, Chally Group, retrieved on May 22, 2011, from http://www.chally.com/turnover/index.html Employ Retention, n.d , Top Talent, retrieved on May 22, 2011, from http://www.toptalentmn.com/employee-retention Heathfield, S, M, 2011, ‘What is Human Resource Management,’ About.com, retrieved on May 22, 2011, from http://humanresources.about.com/od/glossaryh/f/hr_management.htm Kachmar, 2006, ‘Sure everyone can be replaced... but at what cost? Turnover as a predictor of unit level performance,’ The Academy of Management Journal Archive, vol. 49, no. 1, retrieved on May 22, 2011, from http://aomarticles.metapress.com/content/df9299gtf6epr89t/ Rinella, S, D, and Kopecky, R, J, 1989, ‘Burger King hooks up employees with educational incentives,’ Human Resource and Public Relation, viewed on May 23, 2011, from http://www.faqs.org/abstracts/Human-resources-and-labor-relations/Burger-King-hooks-employees-with-educational-incentives-Managing-mental-health-costs-is-a-balancing-.html#ixzz1NBFghRIG The cause of turnover, 2011, Sigma, retrieved on May 22, 2011, from http://www.sigmaassessmentsystems.com/articles/empturnover.asp Walsh, J. (1998) ‘McJob Image First Target in Burger Recruitment War,’ People Management, vol. 4, no. 2 Read More